The Crisis of Progressive Neoliberalism

How should we understand the crisis of the current moment? Is the election of President Trump a temporary aberration or does it reflect deeper political trends—both in the United States and elsewhere?

In a recently published essay in American Affairs, I argue that the defining features of Trump’s agenda did not come out of nowhere. What enabled his ascent was first, the rise, and then, the unraveling, of what I call progressive neoliberalism. Progressive neoliberalism tied a finance-centered political economy to a progressive politics of recognition. Grafting neoliberal economics onto mainstream liberal currents of apparently egalitarian social movements, such as feminism, anti-racism, multiculturalism, and LGBTQ rights, it forged a hegemonic bloc that dominated American politics for several decades. Beyond the United States, progressive-neoliberal formations governed many other liberal democracies through center-left parties that made similar deals with bankers and bondholders to gain or maintain power.

Progressive neoliberalism’s main competitor was what I call reactionary neoliberalism, which tied an exclusionary politics of recognition to the same neoliberal political economy.While reactionary neoliberalism was defeated by progressive neoliberalism, it offered no alternative to the latter’s project of Goldman-Sachsifying the US economy. Absent any organized opposition on a national scale, progressive neoliberals from Bill Clinton to Barack Obama were free to promote policies that metastasized finance and gutted manufacturing.They eviscerated unions and drove down real wages, proliferated precarious service-sector jobs and promoted predatory debt to enable the purchase of cheap stuff produced elsewhere. The result was to dramatically worsen the life conditions of the bottom two-thirds of Americans, especially (but not only) in rustbelt, southern, and rural communities, even as soaring stock markets fattened not just the one percent but also the upper reaches of the professional-managerial class. In due course, many harmed by these policies came to reject not only neoliberal political economy, but also the more inclusive view of recognition they associated with it.

Trump profited from just this conjecture. Campaigning for the presidency as an insurgent, he offered an anti-neoliberal alternative, which I call reactionary populism. Tying an exclusionary vision of American identity to a more populist, people-centered political economy, he appeared to incarnate a right wing variant of Bernie Sanders’s progressive populism. But once elected, Trump has moved to the right on economic issues as well. Failing to pursue large-scale infrastructural projects and embracing the Republicans’ plutocratic tax bill, he has reneged on his populist campaign promises, while intensifying his increasingly vicious and exclusionary politics of recognition. The result is not reactionary populism, but a hyper-reactionary neoliberalism, which disguises the ongoing decimation of the real economy through the scapegoating of minorities, immigrants, women and others.

Hyper-reactionary neoliberalism does not, however, constitute a new hegemonic bloc, which could install a stable and enduring alternative to progressive neoliberalism. Highly combustible, it represents a fragile interregnum at best. In fact, as I argue in the essay, the most likely candidate for a viable replacement for progressive neoliberalism would be progressive populism. The Democratic Party is currently at war with itself on just this issue, as its populist and neoliberal factions proffer competing analyses of the effects of race versus class in fueling Trump’s rise. I argue that this is a false opposition that fails to capture the deeper dynamics of the present conjuncture. An objective way beyond the current crisis must be rooted in an anti-neoliberal politics capable of generating a new hegemonic bloc that ties an inclusive social vision to a people-centered political economy.

Nancy Fraser is the Henry A. and Louise Loeb Professor of Political and Social Science and Professor of Philosophy at The New School in New York City.